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10/12/2010

Shutting Up Business

Democrats unleash the IRS and Justice on donors to their political opponents.

If at first you don't succeed, get some friends in high places to shut your opponents up. That's the latest Washington power play, as Democrats and liberals attack the Chamber of Commerce and independent spending groups in an attempt to stop businesses from participating in politics

Since the Supreme Court's January decision in Citizens United v. FEC, Democrats in Congress have been trying to pass legislation to repeal the First Amendment for business, though not for unions. Having failed on that score, they're now turning to legal and political threats. Funny how all of this outrage never surfaced when the likes of Peter Lewis of Progressive insurance and George Soros helped to make Democrats financially dominant in 2006 and 2008.

Chairman Max Baucus of the powerful Senate Finance Committee got the threats going last month when he asked Internal Revenue Service Commissioner Douglas Shulman to investigate if certain tax exempt 501(c) groups had violated the law by engaging in too much political campaign activity. Lest there be any confusion about his targets, the Montana Democrat flagged articles focused on GOP-leaning groups, including Americans for Job Security and American Crossroads.

Mr. Baucus was seconded last week by the ostensibly nonpartisan campaign reform groups Democracy 21 and the Campaign Legal Center, which asked the IRS to investigate whether Crossroads is spending too much money on campaigns. Those two outfits swallowed their referee whistle in the last two campaign cycles, but they're all worked up now that Republicans might win more seats. Crossroads GPS, a 501(c)(4) affiliate of American Crossroads supported by Karl Rove, is a target because it has spent millions already in this election cycle.

Last Tuesday, the liberal blog ThinkProgress, run by the Center for American Progress Action Fund, reported that the U.S. Chamber of Commerce had collected some $300,000 in annual dues from foreign companies. Since the money went into the Chamber's general fund, the allegation is that it could have been used to pay for political ads, which would violate a ban on foreign companies participating in American elections. The Chamber says it uses no foreign money for its political activities and goes to great lengths to raise separate funds for political purposes.

That didn't stop President Obama from raising the issue in a Maryland speech last week, saying that "groups that receive foreign money are spending huge sums to influence American elections." Within hours of the ThinkProgress report, the bully boys at MoveOn.org asked the Department of Justice to launch a criminal investigation of the Chamber. In a letter to the Federal Election Commission, Minnesota Senator Al Franken expressed his profound concern that "foreign corporations are indirectly spending significant sums to influence American elections through third-party groups." From the man who stole his Senate election in a dubious recount, this is rich.

Even Mr. Franken admits in his letter that the Chamber's commingling of funds in its general accounts is not "per se illegal," but apparently he thinks it's fine to unleash federal investigators because the Chamber cash might contribute to the defeat of fellow Democrats.

The outrage over the Chamber is especially amusing considering the role of foreigners in U.S. labor unions. According to the Center for Competitive Politics, close to half of the unions that are members of the AFL-CIO are international. One man's corporate commingling is another's union dues.

Unions and liberal groups are hardly cash poor this year in any case. The Campaign Media Analysis Group looked at the combined spending of candidates, their parties and outside groups and found that Democrats outspent Republicans $47.3 million to $40.8 million in a recent 60-day period.

Democrats claim only to favor "disclosure" of donors, but their legal intimidation attempts are the best argument against disclosure. Liberals want the names of business donors made public so they can become targets of vilification with the goal of intimidating them into silence. A CEO or corporate board is likely to think twice about contributing to a campaign fund if the IRS or prosecutors might come calling. If Democrats can reduce business donations in the next three weeks, they can limit the number of GOP challengers with a chance to win and reduce Democratic Congressional losses.

The strategy got a test drive in Minnesota earlier this year after Target Corporation donated $100,000 cash and $50,000 of in-kind contributions to an independent group that ran ads supporting the primary candidacy of Republican gubernatorial candidate Tom Emmer. MoveOn.org accused the company of being anti-gay, organized a petition, and crafted a TV ad urging shoppers to boycott Target stores. Target made no further donations, and other companies that once showed an interest have since declined to contribute.

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Then there's the curious reference to the tax status of Koch Industries by White House chief economist Austan Goolsbee. In a late August conference call with reporters, Mr. Goolsbee cited the closely-held Koch as an example of "really giant firms" that pay no corporate income tax because they file under other tax rules. But how in the world would Mr. Goolsbee know Koch's tax status? Could his knowledge be related to the White House-liberal campaign against Koch for contributing to Americans for Prosperity, a group that is supporting free-market candidates for Congress this year?

In an August 9 speech, Mr. Obama personally trashed Americans for Prosperity, hinting that it was funded by "a big oil company." He had to mean Koch, which makes no secret of its support for Americans for Prosperity.

The White House didn't respond to queries about Mr. Goolsbee's remark for weeks until GOP Senators requested an investigation. The Treasury's inspector general for tax matters has since announced such a probe, and last week White House spokesman Robert Gibbs finally got around to explaining that Mr. Goolsbee's statement "was not in any way based on any review of tax filings" and that he won't use the example again.

We're glad to hear it, but pardon our skepticism given the ferocity of this White House-led campaign against businesses that donate to political campaigns. Faced with electoral repudiation as the public turns against their agenda, Democrats are unleashing government power to silence their political opponents. Instead of piling on, the press corps ought to blow the whistle on this attempt to stifle political speech. This is one more liberal abuse of power that voters should consider as they head to the polls.